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Thursday, 13 June 2013

"The Who once sang, “We won’t get fooled again”, and this is the message we should keep sending to the individuals mismanaging Egypt. I’ll tell you about just one of their tricks to try and fool you: Egypt’s foreign currency reserves figures.
Egyptian officials may have conveyed an appearance of organisation by releasing to the media monthly figures for gross reserves, but they have been reluctant to tell you the whole truth.
Gross reserves climbed to $16 billion at the end of May 2013, the highest point since February 2012 but look closer and not all is what it seems. This figure has been inflated by massive short-term borrowing and other activities. Behind these headline numbers, Egypt’s effective reserve level tells a very different story."

"A planned leadership change that could see Qatar's U.S.-allied Emir eventually ceding power to his son is unlikely to change the Gulf state's taste for bold investments overseas and assertive support for Arab Spring revolts.

Analysts say Heir Apparent Sheikh Tamim will probably pursue the policies of his father, under whose rule the U.S.-allied gas exporter has become a force in global sports, media and business and an enthusiastic political ally of the Muslim Brotherhood.

The current prime minister, Sheikh Hamad Bin Jassim al-Thani, 53, also expected to step down under the reported transition plan, will likely remain head of the Qatar Investment Authority, providing continuity in a vital arm of state power."

"Qatar is thinking big when it comes to asset management.
The gas-rich emirate has large ambitions to develop its domestic capital markets and to build a world-class asset management industry that can better serve the county’s vast wealth and that of the entire Middle East.
Estimates suggest that a $1.5tn wealth pool is held across the six states of the Gulf Co-operation Council by institutions (excluding sovereign wealth funds) via banks, insurance companies, private corporates and wealthy individuals. That pool jumps to $3tn once the GCC’s richest families are included."

"Shares in state-controlled PKO BP, Poland’s largest bank, gained 2.8 per cent on Thursday following its 2.83bn zloty ($887m) purchase of the Polish assets of Swedish bank, Nordea.

The bank said it was not planning any more acquisitions on its home market. “We currently do not forsee any further desire to participate in a similar event,” PKO’s CEO, ZbigniewJagiello, told a news conference.

The acquisition of Nordea’s banking, life insurance and financing businesses in Poland will strengthen PKO’s already dominant position on the local market but also increase its exposure to mortgages denominated in foreign currencies. Loans in either Swiss francs or euros were enormously popular among Poles before the economic crisis of 2008 because they were much more attractive than high-interest zloty loans."

"Norway has been producing oil offshore since the 1970s and hardly needs help from relatively inexperienced Russia.

So presumably it’s for strategic reasons that Norway’s energy ministry decided this week to award Russian oil companies rights to explore on the Norwegian continental shelf for the first time. The two countries do after all share an offshore frontier.

Rosneft, the Russian state oil company, and Lukoil, the country’s biggest privately owned oil producer, were among 29 companies that won licenses in Norway’s latest bidding round. The results announced on Wednesday have opened up a large tract of the northern Barents Sea for exploration."

"Hypermarket chain Lenta, part-owned by U.S. private equity firm TPG and VTB Capital, has selected banks for a possible initial public offering (IPO) next year, two sources familiar with the situation said.

Fast-growing retail and consumer stocks have been among the few bright sparks of the Russian market this year, and a stock market listing could play well with fund managers looking for a way to profit from the country's growing middle class."

"Ukraine has inched closer to signing a product sharing agreement with American giant Chevron after the local city councils of Lviv and Ivano-Frankivsk in western Ukraine received the deal's final text and set tentative voting dates for its approval, Energy Minister Eduard Stavitsky said on June 13.

The finalized version of the product sharing agreement with Chevron was handed over to regional authorities on June 12.

The local councils convene on June 18 and 21, and might consider voting for the agreement on these dates. Their vote is the last stage of approval before it can be signed by central government officials and Chevron, who will form a joint venture to explore gas from shale in Oleska field in western Ukraine."

"Dubai’s shares rose for a third day, reversing losses as MSCI Inc. (MSCI)’s upgrade for the United Arab Emirates outweighed a revision in global growth forecasts that triggered drops in Asia and Europe. Egypt shares also rose.
The benchmark DFM General Index (DFMGI), the world’s third-best performer this year among 94 gauges tracked by Bloomberg, gained 0.2 percent, taking its three-day advance to 2.3 percent. It fell as much as 1.6 percent earlier. Abu Dhabi’s measure was little changed after losing as much as 1 percent, while Egypt’s EGX 30 Index, which tumbled into a bear market yesterday, rose 1.2 percent amid increased buying this month by foreigners.
“At first people reacted negatively because global markets and Asian markets were down,” Mohab Maher, a senior manager at Mena Corp Financial Services, said by phone. “They still have confidence in the market that there will be cash inflow coming sooner or later following the MSCI’s decision.”"

"Ukraine's balance of payments in 2013 has a trend towards improvement, in particular, the current account deficit is expected to shrink to 7% of GDP this year, from 8.4% of GDP last year, First Deputy Prime Minister Serhiy Arbuzov has said.

"In the medium term, we are planning to reach 3-4% of GDP," he said at a conference "ABC: Ukraine and Partners" in Kyiv on Thursday."

"Unatrac Holding Ltd., a Dubai-based dealer of Caterpillar Inc. (CAT) machinery, raised a $700 million loan from a group of 15 banks for working capital and to repay debt.
The three-year revolving credit facility pays interest at 400 basis points, or 4 percentage points, more than the London interbank offered rate, the company said in an e-mailed statement. Barclays Plc (BARC), Citigroup Inc and JPMorgan Chase & Co. (JPM) arranged the financing.
The company, owned by the Mansour family, increased the loan from $600 million after Unatrac received offers for almost twice that amount, according to the statement. In a revolving credit facility, money can be borrowed again after it is repaid."

"The United Arab Emirates is succeeding in strengthening its state finances by restraining spending, and managed last year to reduce the oil price which it needs to balance its budget, the International Monetary Fund said on Thursday.

But the possibility of another boom-and-bust cycle in debt-laden Dubai is a risk for the UAE economy in the medium term, the IMF warned after the emirate announced a string of huge real estate development projects.

The IMF's report, released after annual consultations with the UAE, indicated the country is doing more than other Gulf Arab oil exporters to rein in growth of government spending and reduce its vulnerability to any steep fall of the oil price."

"A swelling ocean of cheap and dirty fuel oil pouring out of Russian refineries and onto world markets tells the story of misaligned tax policies and perverse incentives that jeopardize President Vladimir Putin's campaign to modernize industry.

Despite repeated attempts to fix its tax system, export incentives that are meant to be phased out by 2015 still make it more profitable to export cheap fuel oil — the detritus of the refining process — than the crude from which it is made.

The result has been a glut of exports of the lowest-value refined oil product and very slow progress in improving Russia's creaky refining industry, which has ballooned into the world's third largest to meet domestic demand for gasoline."

"Kuwait’s QualityNet, the Gulf state’s largest internet provider, is currently in talks with a major global telecoms operator for possible acquisition, CEO Waleed Saleh Al Qallaf has told Arabian Business.
“Yes, one major [deal] is going on now... talking with the owners of QualityNet and the owners of that entity. They have an interest to acquire us,” Al Qallaf said when asked if the company had been approached by any international telecoms firms.
Kuwait is one of the region’s most mature Internet markets."

"Sorouh Real Estate Co. (SOROUH) and Aldar Properties PJSC (ALDAR) rallied after the biggest developers in Abu Dhabi sought to complete their merger this month, helping the benchmark index rebound from losses.
Sorouh climbed 8.3 percent to 2.99 dirhams, the highest since November 2009, while Aldar advanced 4.3 percent to 2.42 dirhams, the strongest since January 2011. They were the most-traded stocks on the benchmark ADX General Index (ADSMI), which pared losses to close little changed.
Aldar and Sorouh, which plan to create a developer with $13 billion in assets, said today they expect the proposed merger to take effect between June 20 and June 30 after approval from the Abu Dhabi Executive Council and a ministerial resolution. Aldar is offering 1.288 shares for every Sorouh stock in an all-share transaction. Sorouh won’t be halted before the merger takes effect, the companies said today."

"Russia has the biggest shale oil reserves in the world and the ninth largest gas resources, said the Energy Information Administration (EIA) in the U.S., in which shale oil and gas production is booming, after surveying reserves in 42 oil producing countries, Vedomosti reported.

The EIA has released a report putting world shale oil reserves at 354 billion barrels, of which 75 billion are in Russia. The U.S. trails with 58 billion barrels, while China has 32 billion barrels.

Russian reserves are concentrated in the bituminous rock of the Bazhenov deposits in Western Siberia. While copious, they are not easily accessible. Only 6 percent of an estimated 1.24 trillion barrels are considered feasible, according to the EIA. Lukoil, Rosneft, ExxonMobil, Gazprom Neft and Shell all plan to develop the area."

President of Ukraine Victor Yanukovych is sure that integration of Ukraine into the EU will promote economic growth of Europe. According to an UNIAN correspondent, he said this during the speech at the 18th summit of the heads of the states of Central Europe, which is take place in Bratislava. “I am convinced that joining of home market of Ukraine, its industrial and agricultural forces the European economic space will have a considerable positive influence on general European economic situation and will help Europe in way out of the crisis”, - underlined V. Yanukovych.

"By now, everyone knows Tuesday was a big day for the EM bond market. But has the market really taken stock of how ‘bad’ things are?

Bloomberg reports on Thursday that this is probably the biggest drop in creditworthiness for emerging-market borrowers since the credit crisis started. Worse still, it is deepening. This they say is because speculation is intensifying (no-doubt among the buy-side) that central banks will scale back record stimulus**.

(*It’s a view that possibly represents the largest buy-side irrationality since fund managers decided going against the long-term yen trade was a good idea. Or that Abenomics represented something more permanent than a major mean reverting arbitrage opportunity.)"

"Former President of the Parliamentary Assembly of the Council of Europe (PACE) Mevlut Cavusoglu has said that the EU should "open the door" to nations such as Ukraine and benefit from the growth of greater trade and the spread of European values, according to the Wall Street Journal.

"The European Union has an historic opportunity to open the Ukrainian market and double its current EUR 40 billion a year of annual trade," he said at a conference in Istanbul.

While commenting on Ukraine's relations with the EU and Russia, Cavusoglu said: "Ukraine should be helped from both sides, not pushed by both sides.""

"Paul Davies, the JKX Oil & Gas chief executive who last week survived an attempted boardroom coup, has called on the company’s two leading shareholders to make a clear choice: buy the energy group or leave its management in peace.
“They can’t have it both ways – they either buy the company or don’t,” said Mr Davies. “We are not saying stop buying shares or don’t buy the company. But they can’t control it with the current shareholding.”
In a letter dispatched to shareholders on Wednesday, Nigel Moore, chairman, thanked them for their overwhelming support in voting for the reappointment of Mr Davies at its annual meeting last week."

"Billionaire Alexander Lebedev has been in talks with investors about selling his 4.5 percent stake in flagship carrier Aeroflot, the tycoon was quoted as saying on Thursday by Vedomosti.

Lebedev, an outspoken entrepreneur with media assets in Russia and Britain, said last year that he may sell his Russian assets after coming under Kremlin pressure and being charged over his part in a fracas on a TV talk show.

The 53-year-old backer of British newspapers The Independent and The Evening Standard has been reducing his holding in Aeroflot, decreasing his stake to 12.5 percent as of late last year from more than 25 percent earlier, the paper said."

"Abu Dhabi property firms Aldar Properties PJSC and Sorouh Real Estate said the two companies expect to close their state-backed merger by June 30, pending a ministerial resolution approving the deal.
A three-month period for Sorouh creditors to object to the proposed merger has expired without any objections being raised, the two companies said in a joint bourse statement on Thursday.
The companies have applied for approval from Abu Dhabi’s Executive Council. Once the approval is granted, the two companies will apply for a ministerial resolution to approve the deal, they said. The resolution is expected to be issued between June 20 and June 30.
The boards of the state-linked rivals proposed a merger in January and the deal was expected to be completed by end of June."

"DUBAI is back with the big plans. What it doesn't have are the biggest property investors. Surging home prices in parts of Dubai and rebounding shopping and tourism markets are prompting developers to announce projects on a scale not seen since the emirate's property market collapsed in 2008. So far, sovereign wealth, pension and insurance funds are staying away even as they splurge on real estate elsewhere.
"It's a thin market and it has a reputation of being something of a casino," said Richard Price, chief executive for Asia at CBRE Global Investors, which manages US$93 billion of property assets. "I struggle to think of any real client appetite for exposure."
Dubai's developers, government officials and leader Sheikh Mohammed bin Rashid Al Maktoum have unveiled projects with a value of at least US$40 billion in the past six months while providing few details on how they would be financed. With local and foreign banks unable or unwilling to lend for development, the absence of institutional investors calls into question just how many of the plans will come to fruition."

"Dubai is this week pitching to host the World Expo 2020 amid quiet confidence among the emirate’s business community that the bid will be successful, securing a surge in economic activity.
The United Arab Emirates delegation, headed by ruler Sheikh Mohammed bin Rashid Al Maktoum, is up against four rival presentations to the Paris-based body that oversees world fairs, at which member states erect thematic national pavilions.
With the Thai bid was disqualified, the other contenders are Ekaterinburg in Russia, Izmir in Turkey and São Paulo in Brazil. The Bureau International des Expositions will announce the winner in November."